Dave Says

Thursday, July 3, 2008 at 2:56am

Dave Ramsey says to pay off student loan debt before making any big purchases or beginning to save for retirement. Even for a recent medical student graduate, it’s a prescription for disaster, he says. Bloomberg News

Dear Dave,

I’m 33 and a resident doctor with $250,000 in student loan debt. This is the only debt I have, and I’ve managed to scrape together about $1,000 in savings. Next year I’ll finish my residency and increase my income from $40,000 to about $400,000. The interest rate on my loan is just 3.5 percent, so I’d like to postpone paying it off and buy a house and begin saving for retirement instead. Is this a good idea?

— Derrick

Dear Derrick,

I wouldn’t do it that way. That student loan debt hanging over your head is unbelievable. I mean, it’s massive!

I’m thrilled that you’re going to be making that kind of money. You’ve spent most of your life going to school, training, living on nothing and working yourself to death. But if you’re not careful you might catch a nasty disease called “doc-itis.”

“Doc-itis” is an ailment that afflicts lots of new doctors. Some of the symptoms include two or three leased BMWs and a fully furnished house with a pool on the golf course. It’s a financially debilitating disease, and I don’t want you to get sick!

You’ve been used to living on $40,000 a year for a while now. Just keep on doing that for a little bit longer. With the kind of money you’ll be making you can have that student loan debt knocked out in a couple of years. After that, just follow the Baby Steps. The only difference for you is that there will be a few more zeroes attached.

If you stay smart and play this right, Derrick, you’ll have no problem living well and retiring a very wealthy man!

—Dave

Dear Dave,

I’ve been getting calls from a collection agency over an account that’s not mine. In fact, I’ve never had an account with the company they’re talking about. Every time they call they ask for my Social Security number to verify who I am. I haven’t given it to them, but I’m not sure what else to do.

—Anne

Dear Anne,

You’ve done the right thing so far. Never give out your personal information over the phone when someone like this calls! If you had opened an account with the company they’re talking about the collector should already have had plenty of “verification information.”

This situation is more than just a pain in the neck. It could cause you more problems down the road if it’s not properly addressed. You may have to get tough and thump them a little. Let them know you mean business when you tell them not to call back, and if they do report them to the Federal Trade Commission.

I’d also consider putting a fraud victim alert on your credit report. It costs nothing except a little of your time to make this happen. You might look into getting identity theft protection insurance, too. It’s really cheap, and it can save you lots of headaches if someone steals your personal information!

— Dave

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